A meta-analysis on the effects of IT capability toward agility and performance: New directions for information systems research

Information technology (IT) capability is an organizational capability that enables organizations to acquire, deploy, combine, and reconfigure IT resources. As such, it is often investigated in conjunction with organizational agility—an organization’s ability to sense and respond to changes—and organizational performance. Studies on IT capability distinguish between reactive and proactive IT capability and identify varying effects in relation to agility and performance. While reactive IT capability supports and enhances work processes, proactive IT capability supports and enhances business strategies. In the light of the mixed results of prior research, we conduct a meta-analytical investigation into the varying effects that reactive and proactive IT capability have on organizational agility and organizational performance. We identified 6.436 studies from multiple sources that we systematically reduced to include 72 empirical studies in our analysis. Contrary to previous results and widely held opinion, our meta-analysis neither finds support for differences in effect size between reactive (r+ = 0.39, k = 34, 95% Confidence Interval (CI) [0.34, 0.44]) and proactive IT capability (r+ = 0.38, k = 21, 95% CI [0.31, 0.45]) toward agility (z = 0.68, p = 0.25), nor from reactive IT capability (r+ = 0.31, k = 43, 95% CI [0.26, 0.37]) and proactive IT capability (r+ = 0.33, k = 25, 95% CI [0.27, 0.40]) toward performance (z = 1.11, p = 0.13). Given the importance of IT capability, we discuss possible explanations and propose four areas for future research: latency, sequence, configurational, and theoretical multiplicity of IT capability.

Inside-out IS capabilities, such as infrastructure, technical skills, development, and cost-efficient operations improve sustainable advantage through their imitability, substitutability, and mobility characteristics.
Outside-in IS capabilities, such as external relationship management and market responsiveness, and spanning IS capabilities, such as IS-business partnerships and IS management/planning, improve advantage creation through their value, rarity, and appropriability characteristics.

Bhatt and Grover 2005 [3]
ITCR: IT infrastructure ITCP: IT business experience, relationship infrastructure IT infrastructure represents an effective source of value through information sharing across functions, innovation, exploitation of business opportunities, and the flexibility to respond to changes in business strategy.
IT groups' understanding of the business and a positive relationship between IT and business cannot easily be replicated by competitors. IT groups with superior business strategy, competition, and opportunities can continue to leverage these advantages based on their absorptive capability.

ITCR:
IS planning, IS development, IS support maturity, IS operations Strong functional capabilities in the IS department are required to use IT to develop and enhance an organization's core competencies, providing a competitive advantage.

Karimi et al. 2007 [5]
ITCR: ERP capability ERP capability enables cost-effective IS operations and market responsiveness, leading to cost and cycle time reduction, as well as quality, productivity, and customer service improvements.

Aral and Weill 2007 [6]
ITCR: IT skills, IT use, digital transactions, internet architecture Systems of IT practices and competencies enable greater business value generation while reducing internal and external integration costs.

Bharadwaj et al. 2007 [7]
ITCR: Integrated IS capability Integrated IS capability provides visibility to relevant customer, production, order, and market data, facilitates process integration, and provides seamless and consistent access to data. Improved visibility and information flow, centralized services, integrated and standardized activities reduce errors and delays in order processing.

Zhang et al. 2008 [8]
ITCR: IT management ITCP: IT business partnerships IT management capability helps to coordinate multifaceted activities that are needed for successful IT implementations, making the organizations more successful.
IT business partnerships increase trust between IT groups and business units by sharing risk and responsibility of IT applications, which has positive performance implications.

ITCP: Externally-focused IT capabilities
Internally focused IT capabilities provide reliable services and products and minimize overhead costs.
Externally focused IT capabilities help to rapidly sense and respond to market changes and shifts in customer and supplier needs, increasing organizational performance.

Wang et al. 2012 [10]
ITCR: IT support for core competencies, IT support for competitive strategies, IT capabilities IT is used to support the planning and implementation of competitive strategies as well as to enhance and develop competencies. Strong IT capabilities can select and prioritize IS portfolios, ensure appropriate IT investment patterns, and align IT strategies with business strategies.

ITCR: IT competencies
Increased IT competencies increase the business value derived from business functions, ensuring timely information availability. Information processing enables information utilization, which facilitates firm performance.

Chen et al. 2014
[12] ITCR: IT capability IT capability improves business processes by infusing them with swiftness, robustness, and flexibility, indicators for business process agility, which in turn helps organizations to improve different performance measures.

ITCP:
IT-based knowledge management IT-based knowledge management enables organizational units to share their capabilities and know-how to achieve better performance.

ITCR:
IT support for functionality-related competency ITCP: IT support for marketaccess competency IT support for functionality-related competency increases strategic flexibility to refocus resources and improve performance.
IT support for market-access competency improves strategic flexibility to recalibrate strategy for performance gains.

ITCP:
IT-enabled sensing capability IT-enabled sensing capability improves capitalizing on the market by new or improved value propositions through focused deployment.

ITCR:
IT application orchestration capability Building new combinations of IT resources and continuously updating portfolio of IT applications has positive performance implications.